US un­cer­tainty helps to lift kiwi

Weekend Herald - - MARKETS -

The New Zealand dol­lar is head­ing for a 0.7 per cent weekly gain, hav­ing gone side­ways in the lo­cal trad­ing ses­sion as mar­kets await US in­fla­tion data.

The kiwi traded at US71.40c at 5pm yes­ter­day ver­sus US71.34c at 8am, up from US71.04c on Thurs­day. It traded at US70.92c in New York last week. The trade- weighted in­dex ad­vanced to 75.04 from 74.74 Thurs­day.

Martin Rud­ings, se­nior dealer for­eign ex­change at OMF in Wellington, said the green­back had been un­der pres­sure as mar­kets were still jit­tery about US Pres­i­dent Don­ald Trump, given on­go­ing geopo­lit­i­cal and eco­nomic risk.

“Gen­er­ally the back­drop is a dark cloud over the US econ­omy be­cause of Trump,” some­thing that is likely to re­main, he said. The US dol­lar was also weighed on this week when min­utes from the Fed­eral Open Mar­ket Com­mit­tee’s Septem­ber meet­ing showed pol­i­cy­mak­ers held con­cerns about the strength of in­fla­tion in the world’s big­gest econ­omy.

Mar­kets are now fo­cused on US in­fla­tion data due overnight in the US for fur­ther clues about how ag­gres­sively the Fed will lift rates.

Rud­ings said an eas­ing in the green­back over Septem­ber may have “brought out a lit­tle bit of in­fla­tion” and if the num­ber is higher than ex­pected the dol­lar could get a lift. The data is pre­dicted to show the an­nual pace of in­fla­tion ac­cel­er­at­ing to 2.3 per cent.

Do­mes­ti­cally, in­vestors are wait­ing to see if NZ First will back a Na­tional- led or Labour- led gov­ern­ment. NZ First leader Win­ston Peters con­firmed that his party’s board would meet with the party’s nine- MP cau­cus on Mon­day to de­cide which of the two ma­jor par­ties to sup­port to form a gov­ern­ment. He ex­pected to make an an­nounce­ment af­ter that meet­ing.

The kiwi rose to A91.09c from A90.86c on Thurs­day and gained to 4.6952 Chi­nese yuan from 4.6794 yuan. It in­creased to ¥ 80.08 from ¥ 79.81 on Thurs­day and ad­vanced to 53.77p from 53.59p. The lo­cal cur­rency gained to 60.24 euro cents from 59.82c on Thurs­day.

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